How the cap was scrapped

November 29, 2013

When former Treasurer Wayne Swan used a quiet Saturday in April to announce a $2000 cap on tax deductions for self-education expenses, AMA President Dr Steve Hambleton immediately knew this would be bad for doctors.

A practising GP himself, he was well aware how much it cost to keep up with the latest developments in medicines and medical treatment, and saw that the $2000 cap would put most of the medical profession – particularly rural doctors and those in training – deeply out of pocket, as well as undermining the continuing professional development crucial to maintaining the nation’s high quality of health care.

Within hours of the announcement, senior AMA officials were in discussions about how to convince the Labor Government to ditch the ill-informed tax change.

On the morning of 16 April, less than 72 hours after Wayne Swan’s press conference, the AMA officially got its anti-tax cap campaign underway, issuing a media statement condemning the move and formally approaching the Treasurer’s office to seek an urgent meeting on the issue.

The following day the AMA’s Executive Council gathered in Canberra to plan their strategy, and Dr Hambleton called both Health Minister Tanya Plibersek and his Opposition counterpart Peter Dutton to detail concerns with the tax change and argue for its repeal.

By the end of the week, AMA officials had already held their first meeting with the Treasurer’s advisors, and plans were well advanced for a survey of AMA members to gauge the likely effect of the tax cap.

What followed was weeks and months of increasingly intensive lobbying and campaigning, both in the full glare of public scrutiny and behind closed doors, to convince all sides of politics the tax cap was a bad idea, not just because of it would hurt doctors, but because of its chilling effect on ongoing education and training across the professions.

As Dr Hambleton was to argue repeatedly over the coming months, it was a “doubly-dumb” impost that deterred people from enhancing their skills and knowledge and directly undermined efforts to enhance national productivity and competitiveness.

On 1 May the AMA announced the results of its initial survey. An extraordinary 4581 members responded, and of these 98 per cent declared the cap would impair their professional development.

Federal AMA, in conjunction with AMA (NSW), developed the doctors4health website as a forum for members to share concerns about the likely effect of the cap, and to provide information to doctors on how to begin lobbying their local MPs.

Both Ms Plibersek and Mr Dutton were grilled on the tax cap when they attended the AMA National Conference on 24 May, and the following day the Conference unanimously passed a motion condemning the tax change.

By this stage the AMA had contacted other professional organisations and industry groups, building awareness that this was not just an issue for the health sector, and at a meeting on 3 June Dr Hambleton and Universities Australia Chief Executive Officer Belinda Robinson agreed to bring together those with an interest in seeing the policy overturned.

On 21 June the Scrap the Cap website (a slogan coined by AMA Director of Public Affairs John Flannery) went live, and on 8 July the first meeting of the Scrap the Cap Alliance – bringing together representatives from 22 peak industry groups and professional organisations – was held.

The following week the AMA delivered its response to a Treasury Discussion Paper on the cap, in which it criticised the poor quality of argument and analysis used by the Government’s chief economic agency to justify the impost.

Expert analysis by Cutcher & Neale Accounting and Financial Services highlighted significant ambiguities and concerns in the way the tax change would operate in practice, including regarding fringe benefit tax liabilities.

On 17 July Dr Hambleton made sure arguments against the tax reached a national audience when he raised the issue during his annual address to the National Press Club.

On 25 July the first crack in bipartisan acceptance of the tax change appeared when, following as meeting in Adelaide with Dr Hambleton and other representatives of the Scrap the Cap Alliance, Shadow Education Minister Christopher Pyne came out and strongly opposed tax change, condemning it as “bad policy”.

The AMA kept the story in the headlines four days later when it released the results of a second, more detailed survey based on responses from 4200 doctors, which showed just how debilitating the tax cap would be for professional education.

The survey found that they spent, on average, $12,637 a year on self-education expenses (one trainee doctor itemised expenses totalling $40,000), meaning the cap would leave them $10,000 out-of-pocket if they maintained their commitment to training and education.

On 30 July the AMA hosted the second meeting of the Scrap the Cap Alliance, which had swelled to include 75 organisations and industry groups, including universities, engineers, dentists, veterinarians, hospitality and tourism industry representatives, and arhcitects.

Armed with evidence of how corrosive the cap would be for professional education, and backed by a strong swell of support across the professions and industry, Dr Hambleton and senior AMA official on 31 July met with then-Opposition Leader Tony Abbott and Mr Dutton to drive home the need to ditch the cap.

The first sign that the relentless campaign was wearing down the Labor Government came two days later when Mr Swan announced the introduction of the cap would be deferred a year, until 1 July 2015.

During the Federal election campaign the AMA and the Alliance worked to keep the cap alive as a campaign issue, though Dr Hambleton admitted later that the Coalition was probably not in a position to commit to scrapping the cap unless or until it was elected and could assess the health of the Commonwealth’s finances.

As they campaigned for the cap’s abolition, a major fear for Dr Hambleton and senior AMA officials was that, instead of scrapping it, the next Government would opt to simply raise the $2000 cap – a move that could have whittled down opposition to the tax change and left the medical profession increasingly isolated in its objections.

Early this month, as they were preparing to meet with Shadow Treasurer Chris Bowen as part of steps to reinvigorate the anti-cap campaign, Dr Hambleton, AMA Secretary General Anne Trimmer and AMA senior policy officer Warwick Hough travelled to Sydney for a meeting with Assistant Treasurer Arthur Sinodinos.

At the 6 November meeting, Senator Sinodinos assured the AMA officials that he understood their concerns about the tax cap, noted the strong representations made by Mr Pyne against the measure and said Treasurer Joe Hockey had looked very carefully at the issue.

He told them Mr Hockey was about to make a statement on tax measures that they should watch very carefully.

The following day, the Treasurer announced the tax cap was among seven tax measures inherited from the Labor Government that had been dumped.

It was a successful conclusion to a campaign that Dr Hambleton said had galvanised the profession like few others.

“This issue has created more feedback and more support and more rallying of the troops for the AMA than any single issue since the medical indemnity crisis,” the AMA President said. “It created common ground from the most senior specialist to the most junior intern; metro and rural; all were affected.”

He said the full gamut of campaign tactics were used, from personal meetings and petitions to individual MPs, to media events and extensive use of social media, including the creation of a Facebook page that received more than 50,000 likes, and more than 24,300 signatures on the Scrap the Cap online petition.

“This is all about what the AMA does well,” Dr Hambleton said. “We got early feedback about the seriousness of the tax change, we wrote to every politician, we refined and updated the message, we maintained momentum, and we got the result.”